Lawrence has seen for some time that the way Gilead works doesn't, well, work. At least, not in a long-term sense. Gilead is still at war with the remaining parts of the U.S. and people are constantly escaping or trying to escape to find asylum in Canada. His solution is New Bethlehem, an island community on the outskirts of Gilead that still exists under the regime's control.
Except, according to Lawrence, the rules are a lot more lax. Lawrence describes the "island settlement" as a place where there are "no handmaids, no hangings" and "a place where refugees can get amnesty."
And, unlike Gilead proper, New Bethlehem doesn't include rules against women reading or writing.
It sounds like the kind of settlement that Lawrence once hoped Gilead would be. With the latter, Lawrence tells June, he had to use religious zealots to get it done. Now, however, as a high-ranking commander in Gilead, he has the power to make a new community that might better mirror his original vision.